Aug. 24 (Bloomberg) -- Nymex Holdings Inc., owner of the world's largest gold futures market, plans to pay members who trade metals about $275 million in stock to win their approval of around-the-clock electronic trading, three people with knowledge of the proposal said.

Nymex had been negotiating for months with metals traders to allow electronic transactions while the open-outcry trading floor is open. The members resisted the switch on concern it would reduce their income. Nymex wants to act now because the Chicago Board of Trade's share of the 100-ounce gold market rose to 48 percent this month from 10 percent in December.

``The Chicago Board of Trade has now driven the Comex kicking, biting and screaming into the 21st century,'' said Keith Bronstein, president of Chicago-based Tradelink LLC. ``There is a consciousness at exchanges that gold is going to be a continually growing market because of its role as money.''

The Nymex board voted two days ago to authorize the payment of 8,400 Nymex shares, worth about $386,400, to each member of the Commodity Exchange Inc. division where gold trades, according to the people. In return, the 712 Comex members will allow Nymex to offer electronic trading of gold futures during the U.S. day.

The vote followed a similar decision in April that put the Nymex's energy contracts on the Chicago Mercantile Exchange's Globex electronic system. That agreement came after electronic trading on the Intercontinental Exchange Inc.'s ICE Futures took market share from Nymex's benchmark crude oil contract.

Nymex spokeswoman Anu Ahluwalia declined to confirm or deny the vote.

SEC Approval

The Comex payments must still be approved by the Securities and Exchange Commission and members of both the Nymex and Comex. Nymex members will probably vote on the plan as soon as possible, two of the people said, declining to be identified because the vote hasn't been made public.

Nymex Chief Executive Officer James Newsome, who is preparing for an initial share sale to the public this year, wants to offer daytime electronic metals trading on Globex to stem gains made by the Board of Trade, which began offering a contract identical to Nymex's in October 2004.

With gold touching a 26-year high in May and trading surging to records, the stakes of a battle over futures tied to the precious metal have multiplied, David Meger, senior commodities analyst at Alaron Trading Corp. in Chicago, said in an Aug. 3 interview.

``With the Board's new electronic contract out there, everybody is fighting for a piece of the bigger pie,'' Meger said.

Nymex Share Price

Nymex shareholders are allowed to trade their shares, which are not yet offered to the public, among themselves. The shares went for $46 each as of Aug. 18. Based on that price, the payment to Comex members would be almost double the $157.1 million in sales Nymex Holdings reported in the second quarter.

ICE Futures, owned by Atlanta-based Intercontinental Exchange Inc., broke Nymex's monopoly on U.S. oil futures trading in February, when it began offering an electronic version of the contract. ICE now accounts for more than 30 percent of daily volume in the U.S. oil futures market, though trading in Nymex crude has increased over the period.

The move by Nymex to put Comex contracts on the Chicago exchange's Globex system might be too late, Bronstein said.

``It remains to be seen how many gold-trading platforms we need,'' said Bronstein, who uses both markets to buy and sell gold contracts. ``After the Comex transitions to the CME, the Board of Trade will still be the superior gold-trading platform.''

Comex members will resist the NYMEX's overture. $300,000 in exchange for losing your livelihood as a floor trader is not a great deal. Particularly given that each NYMEX member is sitting on stock worth several million. (Comex screwed themselves by selling out to NYMEX on the cheap several years ago).

Comex members will resist the NYMEX's overture. $300,000 in exchange for losing your livelihood as a floor trader is not a great deal. Particularly given that each NYMEX member is sitting on stock worth several million. (Comex screwed themselves by selling out to NYMEX on the cheap several years ago).

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Hasn't the ecbot trade done/will do to the floor traders all that a side-by-side at comex would be expected to already? Then 300k might not look so shabby.